Document Content

DECISION No

DECISION No. 78/2002/QD-BTC OF JUNE 10, 2002 PROMULGATING THE REGULATION ON PRINCIPLES AND METHODS FOR CALCULATING THE COMBINED MOTORBIKE-MANUFACTURING AND -ASSEMBLING CAPACITY

THE MINISTER OF FINANCE

Pursuant to the Government�s Decree No. 15/CP of March 2, 1993 on the tasks, powers and State management responsibilities of the ministries and ministerial-level agencies;

Pursuant to the Government�s Decree No. 178/CP of October 28, 1994 on the tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to Clause 3, Article 2 of the Prime Minister�s Decision No. 38/2002/QD-TTg of March 14, 2002 on management of the manufacture, assembly and import of motorbike components;

After consulting with ministries and branches;

At the proposal of the General Director of Tax,

DECIDES:

Article 1.- To issue together with this Decision the Regulation on principles and methods for calculating the combined motorbike-manufacturing and -assembling capacity.

Article 2.- This Decision takes implementation effect after its signing. The General Director of Tax, the director of the Ministry�s Office and the motorbike-manufacturing and/or �assembling enterprises shall have to implement this Decision.

For the Finance Minister

Vice Minister
TRUONG CHI TRUNG

REGULATION ON PRINCIPLES AND METHODS FOR CALCULATING THE COMBINED MOTORBIKE-MANUFACTURING AND -ASSEMBLING CAPACITY

(Issued together with the Finance Minister�s Decision No. 78/2002/QD-BTC of June 10, 2002)

I. SUBJECTS OF APPLICATION

All enterprises which make investment in the manufacture and/or assembly of motorbikes and fully meet the criteria set for motorbike-manufacturing and/or �assembling enterprises by the Industry Ministry (excluding motorbike-manufacturing and/or �assembling foreign-invested enterprises which strictly fulfill their responsibilities and obligations prescribed in the investment licenses).

For those enterprises which manufacture and/or assemble motorbikes for export, the quantity of motorbikes manufactured and/or assembled for export shall not be controlled under the guidance in this document.

II. MARKING METHOD SERVING AS BASIS FOR DETERMINING THE COMBINED CAPACITY OF EACH ENTERPRISE: THE COMBINED CAPACITY SHALL BE CALCULATED ON THE MAXIMUM SCALE OF 100 POINTS ON THE BASIS OF THE FOLLOWING CRITERIA

1. Investment scale: shall be calculated on the maximum scale of 45 points, and points shall be given according to the total investment capital on the following principles:

a/ Machinery and equipment, as investment in manufacture for assembly (including machinery and equipment contributed by enterprises as investment capital in joint-ventures with other enterprises for the manufacture of motorbike components and accessories in service of the enterprises� motorbike manufacture and assembly): 35 points

- Investment of up to VND 10 billion: 10 points

- Investment of between over VND 10 billion and 15 billion: 15 points

- Investments of between over VND 15 billion and 20 billion: 20 points

- Investments of between over VND 20 billion and 25 billion: 25 points

- Investments of between over VND 25 billion and 30 billion: 30 points

- Investments of VND over 30 billion: 35 points

Investment capital contributed in cash to joint-ventures for the manufacture of motorbike components and accessories shall be included into the investment capital in directly-manufacturing machinery and equipment according to coefficient H = 0.5.

For example: Enterprise A invests machinery and equipment valued at VND 10 billion in motorbike manufacture and assembly. At the same time it has contributed a cash amount of VND 5 billion to a joint-venture for the manufacture of motorbike components and accessories. According to the above-said stipulation, the total investment capital of Enterprise A shall be: VND 10 billion (machinery and equipment) + VND 5 billion (investment capital contributed in cash to the joint-venture) x 0.5 = VND 12.5 billion.

b/ Workshops (excluding land rents and land compensations), office equipment, infrastructure construction (electricity, water supply and drainage, environmental sanitation,�): 10 points

- Investment of up to VND 05 billion: 03 points

- Investment of between over VND 05 billion and 08 billion: 05 points

- Investment of between over VND 08 billion and 10 billion: 07 points

- Investment of over VND 10 billion: 10 points

Enterprises� workshops contributed as investment capital to joint-ventures in direct service of the manufacture of motorbike components and accessories for implementation of their localization programs shall also be included into the value of their workshops.

Those enterprises which manufacture and/or deal in more than one type of products (including products other than motorbike components and accessories), shall declare only the value of machinery and equipment; for workshops, office equipment and constructed infrastructure,� directly involved in the manufacture of motorbike components and accessories, if they can not be separated, the declaration thereof shall be based on the ratio between the value of output of the manufactured motorbike components and accessories and the total value of the output manufactured and/or purchased by enterprises.

The above-said total investment capital for motorbike manufacture and assembly shall be determined as a residual value of the fixed assets being machinery, equipment and workshops and the other total investment capital reflected on the enterprises� accounting books and vouchers at the time of registration for approval of the combined capacity. (The period-end figures are calculated according to the enterprises� settlement reports at the time closest to the time of registration for approval).

2. Technologies, the advancedness and synchroneousness of machinery and equipment directly involved in the manufacture shall be based on the value of each type of machinery or equipment for calculation on the maximum scale of 30 points, of which:

a/ Simple chain for motorbike assembly: 03 points

- With a value of up to VND 02 billion: 01 point

- With a value of between over VND 02 billion and 03 billion: 02 points

- With a value of over VND 03 billion or more: 03 points

b/ Machinery and equipment for manufacture of frames and petrol tanks: 04 points

- With a value of up to VND 01 billion: 01 point

- With a value of between over VND 01 billion and 02 billion: 02 points

- With a value of between over VND 02 billion and 03 billion: 03 points

- With a value of over VND 03 billion: 04 points

c/ Machinery and equipment for manufacture of plastic components and details (including pressing machines, casting dies, painting and polishing equipment,�): 04 points

- With a value of up to VND 02 billion: 01 point

- With a value of between over VND 02 billion and 3.5 billion: 02 points

- With a value of between over VND 3.5 billion and 05 billion: 03 points

- With a value of over VND 05 billion: 04 points

d/ Machinery and equipment for manufacture of aluminum or cast pig iron components and details such as hubs, cylinders, sock absorber covers, crank covers, crank cases,�: 05 points

- With a value of up to VND 02 billion: 02 points

- With a value of between over VND 02 billion and 03 billion: 03 points

- With a value of between over VND 03 billion and 04 billion: 04 points

- With a value of over VND 04 billion: 05 points

e/ Machinery and equipment for engine manufacture and assembly: 05 points

- With a value of up to VND 02 billion: 02 points

- With a value of between over VND 02 billion and 03 billion: 03 points

- With a value of between over VND 03 billion and 04 billion: 04 points

- With a value of over VND 04 billion: 05 points

g/ Machinery and equipment for shock absorber manufacture and assembly: 03 points

- With a value of up to VND 01 billion: 01 point

- With a value of between over VND 01 billion and 02 billion: 02 points

- With a value of over VND 02 billion: 03 points

h/ Machinery and equipment for manufacture of electric equipment (IC assembly, assorted light assemblies, ignition coils, relays,�in Group V on the list of percentages of motorbike components and details, issued together with Joint-Circular No. 92/2001/TTLT-BTC-BCN-TCHQ of November 20, 2001): 03 points

- With a value of up to VND 02 billion: 01 point

- With a value of between over VND 02 billion and 03 billion: 02 points

- With a value of over VND 03 billion: 03 points

i/ Other manufacturing and assembling machinery and equipment: 03 points

- With a value of up to VND 02 billion: 01 point

- With a value of between over VND 02 billion and 03 billion: 02 points

- With a value of VND 03 billion: 03 points

The value of machinery and equipment shall be calculated according to the residual value of machinery and equipment inscribed in the enterprises� accounting books. (The period-end figures are calculated according to the enterprises� settlement reports at the latest time). In cases where a machine or equipment is used in the manufacture or assembly of various components and details, the declaration thereof shall be made according to major components or details turned out by such machine or equipment, or the enterprises may opt for which to declare if the major components or details turned out by such machine or equipment can not be identified.

3. The localization rates achieved in the implementation registration year shall be approved by the inter-branch working team (excluding those manufactured by joint-ventures), calculated on the maximum scale of 10 points

- Localization rates of under 20%: 02 points

- Localization rates of between 20% and under 25%: 04 points

- Localization rates of between 25% and under 30%: 06 points

- Localization rates of between 30% and under 35%: 08 points

- Localization rates of 35% or more: 10 points

4. The localization rates achieved in the implementation year shall be approved by the inter-branch working team, for engines with the enterprises� direct investment in the manufacture or assembly thereof, calculated on the maximum scale of 10 points

- Localization rates of under 25%: 03 points

- Localization rates of between 25% and under 30%: 05 points

- Localization rates of between 30% and under 35%: 07 points

- Localization rates of 35% or more: 10 points

5. Technological transfer, license contracts and technical training shall be calculated on the maximum scale of 05 points

- Having technological transfer contracts (for those motorbikes manufactured or assembled by enterprises): 02 points (regardless of the number of contracts)

- Having approved license contracts (for those motorbikes manufactured or assembled by enterprises): 01 point (regardless of the number of contracts)

- Having technical- and skill-training contracts and programs signed between foreign countries and enterprises: 02 points.

On the basis of the marking on the above-said principles, the inter-branch working team shall examine and determine the points obtained by each motorbike-manufacturing and/or assembling enterprise. Enterprises shall be classified into 4 types for determination of the combined capacity, depending on the points got by each enterprise, more concretely:

- Class-1 enterprises: getting 80 points or more

- Class-2 enterprises: getting between 60 points and 79 points

- Class-3 enterprises: getting between 40 points and 59 points

- Class-4 enterprises: getting less than 40 points

III. METHODS OF DETERMINING THE COMBINED CAPACITY FOR EACH

ENTERPRISE

1. Basing itself on the Government�s annual policy on management and administration of the total number of imported motorbike component sets, the Ministry of Finance shall notify the import quota for each enterprise on the following principles:

a/ 30% shall be distributed equally to all enterprises permitted to manufacture and/or assemble motorbikes;

b/ 50% shall be additionally distributed to class-1, class-2 and class-3 enterprises. Principles for additional distribution of quotas to enterprises shall be specified as follows:

- Import quotas additionally given to class-1 enterprises = S1 x 2

- Import quotas additionally given to class-2 enterprises = S1 x 1.5

- Import quotas additionally given to class-3 enterprises = S1 x 1

Of which, S1 shall be calculated according to the following formula:

Total number of component sets additionally distributed to class-1, class-2 and class-3 enterprises

S1 = ���������������������-

(Number of class-1 enterprises x 2) + (Number of class-2

enterprises x 1.5) + (Number of class-3 enterprises x 1)

c/ 20% for reserve to be distributed as follows:

10% of reserve shall be additionally distributed to enterprises which have been notified of import quotas at the beginning of the year but obtained more points thanks to investment in raising the achieved localization rates.

The remaining 10% shall be distributed to enterprises which have just been supplementarily granted the motorbike manufacture and/or assembly licenses after the import quotas have been notified. In cases where there are no such enterprises, this reserve shall be further distributed to enterprises, calculated according to the combined capacity mentioned above.

2. Time for import-quota distribution shall be determined as follows:

a/ The consideration for additional distribution of import quotas to enterprises having obtained more points shall be made in June every year together with the consideration for application of tax preference policy under the provisions at Point 9, Section IV of Joint-Circular No. 92/2001/TTLT-BTC-BCN-TCHQ of November 20, 2001. The additional distribution shall be made on the above-said principles.

b/ The import quotas left by October 31 every year, which have not yet been distributed, shall be distributed to enterprises having capability and wishing to increase import quotas for manufacture and assembly in the year; By November 10 every year at the latest, the motorbike-manufacturing and/or �assembling enterprises must make sum-up reports on the situation of their import, manufacture, assembly and consumption of motorbikes to the end of October 31 (with certification of local tax departments) and send them to the Ministry of Finance (the General Tax Department) for summing up and determining the additional import quotas in order to notify the enterprises thereof. By November 10 every year, those enterprises which fail to send their reports, or which, by the end of October 31, have manufactured and/or assembled only less than 70% of the announced quotas, shall not be considered for additional quota distribution.

IV. IMPLEMENTATION ORGANIZATION

1. Annually, together with the registration for implementation of the tax preference policy, enterprises must send to the Ministry of Finance reports on the situation of manufacture investment, the achieved localization rates, license and technological transfer contracts according to the provisions of Part II of this Regulation (enclosed with relevant dossiers and vouchers,�) so that the inter-branch working team shall consider and give points for each enterprise. Basing itself on the reports and dossiers of registration for implementation of the tax preference policy of each enterprise, the inter-branch working team shall organize, consider and give points for each enterprise together with the approval of the tax preference policy. On the basis of the points given and the combined capacity determined by the inter-branch working team, the Ministry of Finance shall announce the combined capacity of each enterprise together with the preferential tax rates to be enjoyed by enterprises according to the localization rates.

2. In the implementation registration year, if enterprises have got more points thanks to the increased investment in the first 2 quarters of the year and wish to increase the import quotas, they must produce dossiers and reports on the increased investment before May 31 so that the Ministry of Finance shall consider the additional distribution of import quotas in June every year together with the consideration for application of the tax preference policy according to the provisions at Point 9, Section IV of Joint-Circular No. 92/TTLT-BTC-BCN-TCHQ of November 20, 2001.

Any problems arising in the course of implementation should be promptly reported by ministries, branches and enterprises to the Ministry of Finance for consideration and handling.

For the Finance Minister

Vice Minister
TRUONG CHI TRUNG